Carriers Warned About Overselling High-Speed Wireless Data Service

By Joseph Palenchar On Dec 4 2000 - 8:00am

NEW YORK CITY -Wireless carriers could easily oversell the capabilities of high-speed 2.5G and 3G wireless packet-data services if they're not careful, wireless-industry executives said during a recent Bears Stearns conference.

Early handset limitations, RF conditions, distance from cell sites, cell-site density and other factors will conspire to reduce the technologies' maximum data rates, and some of these factors could cause throughput to vary significantly within a carrier's network unless precautions are taken, they said.

Carriers "must be very clear on actual throughputs to customers," said Michael Coyne, Ericsson's U.S. director of 3G networks. The peak rates often quoted by industry engineers are attainable only when users "are sitting under the tower."

Motorola customer solutions group VP Raghu Rau pointed out that to give their best data customers a predictable experience, 3G carriers can implement quality of service standards, such as dedicating more bandwidth to heavy data users.

Cingular Wireless chief technology officer William Clift agreed and said, "If it takes three minutes and 16 minutes [to download] the same file at different times, carriers must address that with quality of service." In most cases, Cingular expects "realizable" throughputs in its GPRS and EDGE networks to be half the quoted peak rates.

Clift also pointed out that "it will be one to three years before terminals [handsets] take full advantage of throughput speeds," and early handsets will deliver slower speeds than each high-speed technology's maximum.

Ericsson's Coyne pointed out other factors that will hold back data speeds. "As you go to extreme RF environments, data rates will drop, though [data coverage will have] the same coverage as 2G [voice]." As a result, he said, "data rates in 3G might approach 2G, depending on RF characteristics." And in suburban and rural markets where cell-site density isn't as high, carriers "will need additional buildout" to maintain data rates.

Sven Borgstrom, a representative of a South American carrier, said his company will "eventually do full coverage, but in the initial stages, it will probably be a businessman's tool."

Similarly, Cingular's Clift mentioned that carrier would "probably deploy" 2.5G technologies first in metro areas, where many early adopters live and work, "and keep circuit switched as a backup."

Motorola's Rau outlined the maximum data rates of various 2.5 and 3G technologies: GPRS, 115 Kbps; CDMA 1X, 144 Kbps; EDGE, 384 Kbps; CDMA 1XAVDO, 384 Kbps; CDMA 1XAVD, 5 Mbps; and W-CDMA and CDMA 2000, 384 Kbps in a mobile environment and

2 Mbps in fixed applications. Those data rates compare to 9.6 and 14.4 Kbps in 2G networks and 19.2 Kbps in CDPD networks.

Whatever their initial speeds, the data technologies will provide always-on service, making dial-up unnecessary. In addition, because they don't tie up a circuit during data sessions, the technologies will accommodate more data users at a time and batteries won't drain as much.

Packet data and circuit-switched data "do the same things," AT&T Wireless' data product VP Thomas Trinneer said in another seminar, but packet delivers a "10:1 cost advantage over circuit," making it possible to price packet data services much lower.

On a related topic, some executives discounted the notion that proliferating two-way SMS usage would persuade people to talk less on their phones. Less talk would reduce carriers' average revenue per user and thus reduce some retailers' monthly residuals.

Dan Eldar, VP of Israeli carrier Partner Communications, said his company hasn't suffered revenue reductions, pointing out that "often, once you get a message, you make a phone call." In addition, he said that although "younger users prefer SMS as their primary communication [method], they become very good customers because they also use voice."

AT&T's Trinneer also noted that many subscribers have given out their wireless-phone numbers to many more people and are getting more inbound calls now that big-bucket rate plans are available. "Now consumers can't get rid of it [their phone]."